Tax Reform is A Promise Kept to Iowa Families

January 19, 2018

Last month, Congress passed and President Trump signed into law the Tax Cuts and Jobs Act. This historic legislation reforms our broken tax code, makes filing simpler and gives a break to middle-class families and low-income earners in Iowa and across the country.

The last time Congress made significant changes to the tax code was in 1986 more than 30 years ago. Between then and now, the tax code grew more complicated.

America needed a simpler tax code, one that closed loopholes and provided more relief to those who needed it most, and one that gave a hand up to middle-class and low-income earners.

That's exactly what the Tax Cuts and Jobs Act does.

This legislation puts families in control of more of their own money, allowing them to decide how to spend it. Whether it's buying a new home, saving for retirement or investing in their children's future, the new tax law empowers individuals to decide how their money is best spent, not Washington spendthrifts.

Passing substantive tax reform has been a goal of mine and many of my colleagues for many years. I'm glad to say that it's finally a reality. We wrote this legislation with the desire to make life better for middle-class Americans, and that's what it does. It focuses on families, opportunity, and a brighter future for the country.

Specifically, the Tax Cuts and Jobs Act provides tax relief for middle-class and low-income earners by cutting tax rates across the board. It nearly doubles the standard deduction, which in addition to providing tax cuts for many low-to-middle-income Iowa families, will also make tax filing much simpler for millions as it will allow 90 percent of taxpayers to file their taxes without spending hours sifting through receipts and tax instructions.

When it comes to families, working parents face unique challenges. The Tax Cuts and Jobs Act addresses some of those challenges by doubling the child tax credit from $1,000 to $2,000, increasing the refundable part of the credit from $1,100 to $1,400 and allowing more parents to claim it. It also preserves the child and dependent care credit. This not only helps working parents, but also those who care for older adults in need of support, such as aging parents, grandparents or family members with special needs. For individuals seeking to grow their families through adoption, it preserves the adoption tax credit, helping families with the high costs associated with adoption and making it easier for children to find loving homes.

When you put all this together, it means a typical Iowa family of four with two children making $59,000 annually could see a tax cut of nearly $1,700. As a result of these reforms, an additional 4.2 million lower-income taxpayers will be excused from paying any federal income tax. This tax relief will help Iowans make ends meet, save for a rainy day and invest in their futures.

The Tax Cuts and Jobs Act is about opportunity. Small businesses employ nearly half of all U.S. workers and create the majority of new American jobs. Here in Iowa, there are more than 260,000 small businesses that employ more than half a million Iowans. Iowans work hard for everything they have and deserve to keep the fruits of their labor. The new law affords small businesses the opportunity to expand and invest in their businesses, hire more workers and increase wages. It also doubles the estate tax exemption to reduce uncertainty and accounting and legal costs for many family farmers and business owners in Iowa and around the country as they prepare to pass down their life's work to the next generation.

The Tax Cuts and Jobs Act incorporates common-sense reforms that lay the foundation for a better future. It provides immediate across-the-board tax relief and is an investment in America's ongoing economic health and prosperity. It puts families first, giving help to the men and women who need it most. It encourages job creation, higher wages and a stronger and more competitive economy. And by broadening the tax base, the law will lighten the financial burden on current taxpayers.

President Trump deserves credit for not only running on a promise to reform the tax code, but keeping his word to Americans and signing this historic accomplishment into law. Tax reform makes good on a years-long promise to deliver significant tax relief to Americans from every walk of life and income level. For millions of Americans, that relief will begin in February when they begin to see the benefits of lower across-the-board income tax rates in their paychecks.

There's been misinformation surrounding this debate, but the bottom line is that the president's signature on this historic tax reform legislation means more money in the pockets of hard-working Iowans is coming soon.

U.S. Sen. Chuck Grassley of Iowa is a senior member and former chairman of the Senate Finance Committee, which has jurisdiction over tax policy, and voted for landmark tax reform legislation, which was signed into law by President Trump.